The 5 Levels to Successful Segmentation

You’ll have heard it a million times: using data is essential to ensuring the success of any mobile marketing campaign. But how?

Data can unlock a range of campaigns, including retargeting. According to Adjust findings, retargeting campaign users make 37% more revenue events in the first 30 days vs. new user acquisition. But you need to make use of the data you already have in order to turn the noise into conversions. And we’re here to tell you how to get started, via segmentation.

Segmentation usually breaks down into two camps; one being user behavior, and the other user attributes. In a recent interview, Yoann Pavy, Head of Digital Marketing for peer-to-peer shopping app Depop, explained how the community marketplace segments users into tribes based on interests or buying behaviors, an application of the behavior approach. An attribute approach might use identifiers specific to mobile marketing, such as device, browser or OS.

Here are the 5 essential guidelines when getting started with segmentation or introducing segmentation analysis in a retargeting campaign.

So how do you start identifying market segments and targets? When you’re mapping out the plan to retarget users, start with the high-value or high-engagement actions you want to encourage. Ask yourself: ‘what are the first five things I want a user to do in my app?’ The answer will provide the perfect blueprint for your segmentation strategy.

But once you have your blueprint, how do you actually know when to retarget? This is when in-app event tracking comes into play.

An ‘event’ is any action taken within your app that you want to track, from viewing a product page to completing registration. A mobile-measurement partner (MMP) can allow you to keep tabs on your users’ behavior and learn how successful you are at steering your users towards your goals. Data on user activity provides invaluable insights into what users do after install and when they might churn.

Having this data is a requirement for Dynamic Product Ads (DPA), which serve users with relevant creative for your target audience, and allow you to deep link users exactly where you want them to land in your app.

There are a few key concepts to keep in mind when creating segments. Think about each of these market segmentation examples in relation to your app, and whether a paid or owned media approach makes sense.

• Inactive users: Remind users of their already installed applications. The aim here is to boost engagement and retention.
• Upselling: Users see the benefits of upgrading their membership (if possible), as well as new apps, or updates.
• Heavy shoppers: You can drive repeated conversions, and promote new products that may interest your spend-heavy users.
• Conversions: Whether a user’s cart is full, or they haven’t completed a registration event, retargeting can help get users to return and fulfill their conversion potential.

But strategies shouldn’t always be general. Think particularly about the vertical that you are operating in. If you’re marketing for a lifestyle brand focusing on beach products, maybe users might be interested in subscribing to your update on weather conditions in their area. Alerting users to your feature after they’ve signed up or viewed some product display pages might drive more engagement with your app.

An app that sells designer socks and shoes can create an audience of users who purchased items belonging to a particular brand. Paying to target this list with advertisements encouraging users to check out that brand’s other offerings from your catalog is a strategy to entice users who might have churned to come back.

As we saw above, segments can guide users through their first steps in your app, but what about the rest of the users’ journey? How do we involve segmentation in all aspects of your app and marketing strategy?

Funnel analysis is an excellent way to identify pain points — but it also provides a retargeting opportunity. If you set up in-app event tracking to correspond with markers in your funnel, also consider adding prompts to users to return to complete their next step. By creating highly targeted audiences based on a user’s place in the funnel, the abandonment rate and the impact of mobile app retargeting on conversion rates become easy to analyze.

Then, events such as drop off, or high churn rates, can be identified and optimized for.

An example of this in practice is how Wallapop, a free virtual flea market, used segmentation to divide up users and target them with different tactics. By creating segments for unregistered users, ‘low’ active users, dormant users (and many more) they saw CPX costs decline significantly in just 8 weeks.

Not only when to message users are impacted by their journey, but how users should be retargeted depends on where they are in the funnel. For instance, at the top of the funnel, more general marketing approaches might be best, but as the user moves through their lifecycle it should become more precise. As you get closer to conversion, more targeted approaches pay off.

One most tried and tested frameworks for customer analysis is RFM (recency, frequency, monetary). First outlined by Jan Roelf Bult and Tom Wansbeek, in a 1995 issue of Marketing Science, RFM is an example of behavioral segmentation marketing. The recency strand of RFM monitors the time since the user’s last interaction with the brand — when was the user last active? When did they last make a transaction?

Frequency examines how often the user interacts with your app. Are they a daily user? It’s important to separate loyal users from people who only opened the app once or twice.

Lastly, it considers the monetary value of the user’s actions and divides high spending users from lower spenders or first-time users who are still only browsing.

As a very simplistic example, let’s split users into three groups per category, for example for recency; very recent session, somewhat recent session and inactive. For frequency there is; very frequent user, somewhat frequent user or a not frequent user. Lastly, for the monetary strand, we have big spender, medium spender or no spend. A user can have any combination of these three traits.

Different types of customers deserve different types of approaches. How we target a user that has a somewhat recent session, but was previously a very frequent user and a big spender is very different to how we will approach a user that opened the app once, never bought anything and churned.

There are other behavioristic segmentation examples, but RFM is a good place to start.

However, RFM isn’t just useful to consider when creating segmentation – it’s also a good guide on when to pounce. When a user’s RFM starts to drop, this is a perfect time for an intervention. If you see a user that was previously a very frequent user suddenly stop coming back, retargeting can help keep them in your app. Keeping your user relationships ticking over means you can keep your churn rate low.

Segmentation also allows for A/B testing of campaigns, creative or strategies. If you create an audience segment, try splitting your users into two groups and run a retargeting campaign with a different creative for each group. With this experiment, you can see how that creative performs among identical sets of users, providing valuable insight for future campaigns.

A clever use for this is when trying to calculate incrementality. Performance marketers often want to measure the added value of their campaigns. In the world of hard sciences, the ideal way to measure impact is a randomized control trial. Much the same way, incrementality lets you utilize a mathematical approach that helps you measure an incremental lift, showing you the real impact of your marketing campaigns versus a control.

A strong feature of segmentation is that it gives you control when dealing with strategy. It’s another tool in your arsenal to deploy to engage users. Even the process of working through the segmentation options, considering how they apply to your app, is a useful brainstorming exercise. When we take information from the general to the specific and apply it in our own lives, we naturally spark ideas.

Mobile retargeting is a powerful tool that is limited only by how creatively you can leverage it. Segmentation drives performance in these campaigns, as well as providing the data-driven metrics we need to evaluate and iterate upon success.

Whether your campaign is event-linked or based on activity, there are plenty of useful options to consider, some of which ask questions about how your brand views itself and what its goals are. But those high-level questions are the reason we got into marketing.

By removing a lot of the difficulty around creating tailored campaigns, marketers are free to focus more on strategy, rather than being frustrated by the process.